Amazon’s Adept AI Acquisition: A Smart Move or Antitrust Loophole?

The New Big Tech Playbook: How Microsoft and Amazon are Swallowing the AI Industry

A couple of months ago, I sat in the audience at a tech conference in San Francisco watching Bloomberg‘s Emily Chang interview Reid Hoffman. She asked about Microsoft’s hiring of the team behind Inflection, a would-be OpenAI competitor co-founded by Hoffman. It was an acquisition in everything but name, clearly designed to avoid the scrutiny of antitrust regulators. Microsoft, where Hoffman is a board member, hired most of Inflection’s employees and licensed the startup’s technology, seemingly designed to make its investors whole — a move the company confirmed with a $650 million payment to Inflection.

Speaking onstage with Chang, Hoffman predicted that what happened to Inflection would become a "pattern" for future AI deals. We’re seeing that pattern play out now.

Last Friday, Amazon announced they are hiring most of the team behind Adept, another would-be OpenAI competitor. Adept raised around $400 million from top-tier investors to build, in the words of CEO David Luan, "a new type of giant model that turns natural language into actions on your machine."

Amazon, echoing Microsoft’s approach, told GeekWire‘s Taylor Soper they’re hiring 80 percent of Adept’s employees, including Luan and his co-founders. In an internal memo, SVP Rohit Prasad stated that, like Microsoft with Inflection, Amazon will license Adept’s technology to "accelerate our roadmap for building digital agents that can automate software workflows."

Adept’s corporate blog post about the news suggests they were running out of money: "Continuing with Adept’s initial plan of building both useful general intelligence and an enterprise agent product would’ve required spending significant attention on fundraising for our foundation models, rather than bringing to life our agent vision". Reports further indicate that the company has been actively looking to sell itself.

The reality is building leading AI models is extremely costly, and raising $400 million isn’t even enough to compete in today’s market. Big Tech, meanwhile, is flush with cash and eager to capitalize on what is perceived as the next big thing. It’s logical for more AI startups to follow the path of Inflection and Adept as the industry consolidates.

However, the problem for Big Tech is that they are no longer allowed to buy companies as freely as they once did. The current antitrust enforcement regime would most certainly try to block an Amazon acquisition of Adept, even if a strong legal argument exists. (Amazon executives are still fuming about not being allowed to buy a robot vacuum cleaner company.)

Despite these limitations, capitalism finds a way. What Microsoft did to Inflection, and what Amazon just did to Adept, is the new Big Tech playbook for swallowing the AI industry and getting away with it. Silicon Valley has a long history of acquihires where a startup is gutted for its people and then left for dead. Microsoft and Amazon have essentially executed reverse acquihires, where hiring employees and a corresponding licensing deal serves to disguise what is, in actuality, an acquisition.

This situation raises several unsettling questions. First, what does this mean for innovation? If promising AI startups are constantly acquired or absorbed by larger companies, will we see fewer disruptive breakthroughs in the future? Will the focus shift from developing truly groundbreaking technologies to consolidating existing capabilities?

Second, how will this consolidation impact competition in the AI landscape? The dominance of a few tech giants in the AI space could stifle competition and potentially lead to limitations in accessibility and ethical considerations. With fewer independent actors, who will challenge the ethical and societal implications of AI development?

Third, what are the long-term implications for these startups’ employees? While job security is often touted as a benefit of being acquired by a larger company, what about the long-term impact on individual career paths and potential for future innovation? Could this become a cycle of talented individuals being poached only to be integrated into existing frameworks, limiting their potential?

And finally, what role will government regulation play in preventing the consolidation of power in the AI landscape? Will existing antitrust laws be sufficient to address these sophisticated maneuvers by Big Tech? Or will new legislation be required to protect competition and innovation in this rapidly evolving field?

These are complex questions with no easy answers. While Big Tech’s actions might appear as business as usual, the ethical and economic implications of this trend are far-reaching and warrant serious scrutiny.

In the meantime, Reid Hoffman, who saw this trend coming months ago, should probably be congratulated for more than just an accurate prediction. One of Adept’s earliest investors was none other than his venture capital firm, Greylock, highlighting the interconnection of power and influence within the tech industry.

As the AI landscape continues to evolve, we can expect to see more of these deals, where Big Tech uses its vast resources to acquire talent and intellectual property without triggering antitrust scrutiny. What remains to be seen is whether this will ultimately benefit the overall development of AI or simply create a closed ecosystem controlled by a few powerful players. Ultimately, it is our responsibility, as a society, to ensure that the evolution of AI remains truly innovative, ethical, and accessible to all.

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